China, Taiwan Companies Compete For iPhone Contracts as Apple Looks to Boost Production

As more Chinese companies are awarded iPhone contracts, reports have shown that competition between Chinese and Taiwanese companies has heightened for iPhone assemblers in the country.

Some of these Chinese firms have so far succeeded in accumulating a larger portion of the market share and are also gradually displacing their known counterpart Taiwan from the iPhone market.

It would be recalled that Investors King on January 5, 2023, reported that Chinese electronic components manufacturer Luxshare recently signed an iPhone 14 manufacturing contract with Apple, which saw its shares rise.

Its contract with Apple was necessitated after Taiwanese multinational electronics contract manufacturer Foxconn halted production in China, following a protest over China’s strict covid measures.

Following Foxconn’s interruption in production, it posted a record of unaudited revenue last year, which saw it fall short of Apple’s expectations.

This spurred Apple to award a contract to its Chinese rival Luxshare to produce premium iPhone models in China to cover up for lost production.

Luxshare which has been previously producing a small quantity of the iPhone 14 pro max model has now taken over the major market share for the production of iPhone in China.

Speaking on China’s increasing dominance in the iPhone market, chairman and CEO of Kirkland capital, Kirk Yang said

“Chinese companies are getting pretty competitive for iPhone assemblers. China is doing quite well in pretty much everything, except semiconductors, so that way eventually, you are going to see more Chinese companies taking market share away from Taiwanese electronic companies.

“With China-Taiwan geo-political tensions, Taiwanese companies on the mainland have seen a lot of pressure in the last five years. A lot of them are moving out of China, that is why Apple has to diversify”.

He further added that Chinese companies have a higher advantage in China, as they can hire people more easily than non-Chinese companies and get better tax incentives.

According to a Nikkei Asia analysis, of Apple’s top 200 suppliers in 2020, 51 were based in China. Also in 2021, mainland China overtook Taiwan to become Apple’s biggest source of suppliers as these suppliers have also helped the tech giant to build production capacity in other Asian countries.

Currently, China now boasts more Apple suppliers than any other country.